Beware! How to Handle Fake Debt Collectors

Past due bills

Debt collection notices | Source: iStock

If you owe several debts, you’ve probably grown used to debt collection calls. You may not even give these calls a second thought. However, you may want to start paying closer attention when the phone rings. There are scammers out there looking for ways to profit from your misfortune. The Federal Trade Commission is warning consumers about scammers attempting to collect debts that don’t even exist. If you haven’t been doing a good job of keeping track of your debts, you could become easy prey.

The FTC said debt collectors are claiming debtors owe money to payday lenders such as Ameriloan, OneClickCash, United Cash Loans, and USFastCash. These companies are real, but if a debt collector calls from a different company, claiming to be collecting on behalf of one of these lenders, the debt is fake, said the FTC. While it is common practice for lenders to sell a customer’s debt to a third party for collection, these particular lenders contacted the FTC and alerted them to the fact that they have never sold customer or account information to an outside debt collector. These companies even went one step further and had their lawyers file a legal declaration stating the debts have not been passed on for collection by an outside agency.

Christopher Koegel, assistant director of the division of financial practices at the FTC, said scammers are being persistent despite the legal declaration. “Even so, we’ve still heard about abusive calls from debt collectors claiming to be collecting money owed to the companies listed above — and we already know that’s not true. But we also know that many of the people who have been called never even had a loan with those lenders in the first place — so the debts themselves also are bogus,” said Koegel.

How you can protect yourself

Man holding briefcase with money

Briefcase with money | Source: iStock

If a debt collector calls you, there are steps you can take to make sure you don’t get scammed.

1. Know your consumer rights

Protecting yourself starts way before you receive a debt collection call. The FTC advises familiarizing yourself with your consumer rights. The Fair Debt Collection Practices Act was created to make sure all consumers are treated appropriately when it comes to recovering debt. Under the FDCPA, debt collectors are prohibited from employing abusive, unfair, or deceptive practices when attempting to collect your debt. If you encounter a surly debt collector hurling threats and expletives at you, for example, this is a clear sign your rights are being violated.

2. Ask questions

If someone calls you claiming to be from a debt collection agency, ask questions. You don’t want to end up getting roped into a financial scam and paying money you never owed. The Federal Trade Commission recommends asking for a validation notice. This notice states how much money you owe and to whom the debt is owed.

3. Order your credit report

Order and review your credit report so that you can see whether the debt appears on your report. If you do not recognize the debt, your next step is to send a letter stating that you are not the owner of the debt mentioned in the validation notice. Next, take steps to dispute the debt.

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